Top economic officials from some of the world’s richest countries have reached broad agreements. on Saturday to support a global minimum tax rate of at least 15% to crack down on multinational corporations using low-tax countries to cover their profits.
Financial Leaders from Seven Countries certify minimum tax rates around the world. Ready to offer to the largest companies in the world. including US tech giants Taxes are paid in the country where they do business but they do not exist during the London Conference.
What is the minimum global tax rate? And how does it work?
“Such global minimum taxes will end corporate taxation from competition to bottom. and ensure fairness for the middle class and working people in the United States and around the world,” Treasury Secretary Janet Yellen tweeted after the meeting.
Companies use tactics to reduce liability. Often by shifting profits and tax revenues to countries with low taxes such as Bermuda, Cayman Islands. or Ireland regardless of the place of sale The practice of American and foreign multinational corporations costs tens of billions of dollars each year, according to the United States. Treasury Department.
Recently, Yellen and Biden̵7;s administration have made a long-standing effort to improve the international tax system. by putting the full weight of the US government to be behind the broader efforts to crack down on tax evasion by multinational corporations By making all countries accept the minimum corporate tax rate. The White House is trying to eliminate some tax havens without compromising the competitiveness of American companies.
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The global average corporate income tax rate, measured in 177 countries, is 23.85%, according to a recent analysis by the Tax Foundation, a nonpartisan organization. Among the G7 countries, the average rate was slightly higher: 24%. That’s a significant drop from 1980 when the average global corporate tax rate was 40.11%.
“Since then, countries have recognized the impact that high corporate tax rates have on business investment decisions,” the analysis said. “There has been a decline in all major regions of the world. including in the largest economies.”
For example, the United States used to have the world’s highest corporate tax rate of 35%, but Republicans reduced that to 21% in 2017 through passing tax and employment cuts. This brings the nation closer to the midpoint in terms of corporate taxes.
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Organization for Economic Cooperation and Development (OECD), based in Paris. The wealthy group of 37 nations has been pushing for years to eradicate corporate tactics that “Take advantage of gaps and mismatches in tax rules to avoid paying taxes.” The global minimum tax will apply to a company’s foreign earnings. This means that countries They can still set their own corporate tax rates at home.
The OECD previously estimated that the global minimum could add up to $100 billion in revenue.
The 10 countries with the highest corporate tax rates are:
These are the 10 countries with the lowest corporate tax rates: